Trading in penny stocks can attract the interest of a lot of people because it can seem accessible because of the small investments needed to make an investment . The temptation to make a few big investments and make a lot of money too quickly can sucker a lot of first-time investors in. The dreams of hitting the big time with their first foray into the game seem to take them over and cause them to make rash decisions that inevitably go sour
But with the right advice from the start you can set yourself up for good things
Basic penny stock concepts
When people purchase a batch of penny stocks and end up keeping them whilst the share price rises in line with the entire stock market they are known to be going long. This strategy often takes a number of years to pay its rewards.
With it being impossible to guarantee the success of every single individual company a lot of newcomers can get caught out when they think that anything they purchase will definitely rise in line with the market . It is a fact that companies will go bankrupt so it is really quite naive to expect any guarantee, regardless of how solid a company might appear to be at any point in time .
Investors who choose to go long with their investments will need to sit out the short term highs and lows of their stocks value and be patient . But they must sit tight and weather the storms, trusting that eventually the value will once again rise up and provide a profit a long way down the track .
The buy and hold strategy is oftentimes very profitable, but over the long term. A lot more money can be made in the short term by going short .
It is the volatility of the short term that a skilled investor in penny stocks can leverage to their advantage .
Short term investments have the potential to have huge returns when played right . Even buying, selling and re-buying the same exact stock can bring huge profits when the value per share is so low when purchased . But as you would expect, with such great rewards also comes a very large risk. It is not something for the feint of heart .
However if you can find some awesome penny stocks to buy up at bargain basement prices and you have the experience and acumen to know exactly when and how to sell them on you will be on to a winner .
Unless you are the sort of person who must learn only by your own mistakes, there are a number of learning resources available, from mentors to online courses and more. This kind of training can give you a good enough background to have some success with your early trades . Knowing when a stock is about to make a strong move is one of the essential skills that you will need as a penny stock investor .